Although estate tax rates are among the highest of any taxes levied on Americans, a surprising
number of older people have done little to minimize their impact.

Only about one-third of people aged 45 and up have a written estate plan, and more than one-fifth
of those over 65 said they didn't need one because they are in good health, according to a recent
survey by Merrill Lynch & Co., the big stock brokerage firm.

A majority of those in the survey, which covered people over 45, do have a will, but fewer than
half were aware of the top estate tax rate (55 percent).

The finding comes as the leading edge of the baby-boom generation is turning 50, the age when
awareness of mortality comes creeping into the edges of one's consciousness.

Financial planners, and of course firms such as Merrill Lynch, see a huge opportunity here, but
they note correctly that good estate planning easily pays for itself in reduced taxes and peace of
mind.

It's also generally not something you can do for yourself, despite the stream of do-it-yourself trust
and estate books and computer programs flowing onto the market. Estate plan flaws usually
surface only after you've died, when it's too late to make repairs. And if you don't do anything, the
state, along with state and federal tax collectors, will do it for you, so there's really no escape.

How much estate planning you need to do depends both on the value of your assets and your
personal situation. Taxes, though important, are only one of the considerations. Two other basic
reasons for estate planning are controlling the disposition of your assets and speeding them into the
hands of the heirs. These reasons interact and their relative importance can vary drastically from
family to family.

Control, for example, may be a non-issue in families with a single child, or for a childless person
who plans to leave his or her assets to charity.

On the other hand, for owners of small businesses or parents of minor children, control is a key
issue. Your estate plan, in this case usually the will, allows you to determine which of your offspring
will run the business, or who will raise the children and manage their property if both you and your
spouse die.

Also, the ability to make seemingly minor decisions, such as who gets the diamond pendant that
belonged to your mother, can greatly reduce friction among the heirs.

"You've got to have a will. Lots of people resist making one because they say, `I don't have
enough,' but there are other reasons" -- such as control, said William G. Brennan, a financial
planner with offices in the District.

Good estate planning also gets your assets into the hands of your heirs quickly and with a minimum
of hassle.

A well-drawn will, trust documents and other related papers make the process of transferring
property to the heirs much faster and can spare them many headaches. Property held in living
trusts, which are becoming more popular, does not pass through probate -- the court-supervised
process of verifying the will -- making access by the trust beneficiaries quick and easy.

Even with a trust, you still need a will, of course, to cover issues such as child guardianships and
any property you didn't place in trust.

Joint ownership, which many married couples use, also allows quick transfer of property, but the
mechanism isn't very flexible and can have nasty tax consequences for larger estates.

While many people regard estate taxes as a concern only for the "rich," it is surprising how quickly
an estate can rise beyond the point where these levies kick in.

Everyone is entitled to a tax credit that effectively eliminates the taxes on the first $600,000 of
assets in an estate, and married people can leave any amount to a surviving spouse tax-free.

That may seem like a lot, but a house in the Washington area, plus some insurance, savings and
maybe a retirement account can easily add up to that much and more. Remember, too, that
personal property, debts owed to you and other items are all included.

And the tax is levied on the full value of the assets, minus any debt, so that unlike the more-familiar
capital gains tax, estate taxes hit the full value of any stock you own, for example, not just the
amount by which they have increased in value over the years.

It you leave everything to your spouse -- either by will or by having everything in joint ownership
-- there will be no tax at your death, but your $600,000 exemption is lost, and everything beyond
your spouse's exemption is taxed at his or her death. By leaving part of your assets to other heirs
or to a trust, you can save your exemption, and you and your spouse together can pass on to the
next generation as much as $1.2 million without tax.

In addition, you can give away as much as $10,000 a year -- $20,000 for a married couple -- per
recipient, so if you can spare some cash, giving it to the heirs can be a good idea.

"At least people should be looking at those things they can do which don't impair their ability" to
control their property or have enough to support themselves, said Brennan. " . . . There are but
certain things you can do that don't have any downside."

For business owners or people with a lot of assets, insurance trusts can be effective, he noted.
With these, insurance death benefits are not subject to income tax, and if the policy is not part of
the estate, it is not subject to estate tax, either.

If you set up an irrevocable trust and have it buy a life insurance policy on you, the policy will not
be part of the estate at your death. You can fund the trust with your annual gift, which the trust
uses to pay the premiums.

The money can then be distributed to the heirs or used to pay estate taxes on a business ownership
or other property that your heirs don't want to liquidate.

There are setup and administration costs to these trusts, but otherwise "there's not a lot of
downside," Brennan said.

No matter how careful you are now, though, remember that estate planning is not a static process.
Your circumstances change -- children grow up, assets increase (or decrease), laws change. You
could get divorced.

A great plan today may be a disaster a decade from now.

"Every few years you've got to sit down and go over it, and make sure it still fits your situation,"
Brennan said.

ARE YOU PREPARED?
Results of a survey of Americans older than 45

78% had discussed their estate plans with family.
77% had prepared wills.
68% had purchased life insurance for survivors.
67% had consulted a lawyer or financial adviser.
48% designated a person or institution to help manage assets.
44% provided for children or grandchildren.
30% had taken steps to minimize estate taxes.
21% arranged for long-term care of elderly dependents.
11% made gifts to minimize estate taxes.